Shares of Delta Air Lines, Inc. (NYSE:DAL) are on the rise Wednesday morning, climbing about 3% on a first-quarter earnings report that topped the pros’ expectations. It’s not much, but it’s no surprise — DAL stock is habitually underappreciated, but perhaps that won’t last for much longer.

The headline numbers: Revenues of $9.15 billion declined 1.1% year-over-year and just slightly missed analysts’ estimates. However, earnings came in at 77 cents per share, which was 2 cents better than the consensus mark.

Delta’s operating income was not incredibly impressive. Adjusted pre-tax income for the quarter came in at $847 million, down 45% year-over-year. DAL blamed higher fuel costs for the expense. Passenger unit revenues declined 0.5% on 0.5% lower capacity. An April storm will reduce the current quarter’s pretax income by $125 million.

They’re good but not great earnings, though little of that is on Delta’s head. Going forward, though, investors would do well to consider buying into DAL stock, as today’s report might be the start of a much bigger run.

It’s Not What You Did, But What You’re Doing

You can wear your nice socks when reading Delta’s earnings release without worry that it will blow them off. The quarter was OK — nothing too great, nothing too bad.

But considering that DAL stock trades at less than 8 times last year’s earnings, there’s no real expectation for amazing growth.

Delta’s situation will improve, though.

Management noted that March was the first month it experienced positive passenger unit revenues since November 2015. Further, they expect current-quarter passenger unit revenues to climb 1% to 3% and to remain positive throughout the year. That’s good, as are the comments from CFO Paul Jacobson regarding fuel costs:

“We expect the entirety of our 2017 margin pressure to have occurred in the March quarter from higher fuel prices.”

Speaking of margins, DAL’s operating margins for the latest quarter came in at 11.5%. Again, nothing to write home about. But for the current quarter, Delta Air Lines expects operating margins of 17% to 19%. That’s a substantial amount of improvement.

Delta’s Strengths

Now that earnings are out, what should investors do with DAL stock? Well, despite some “meh” to Delta’s quarter, the stock actually looks pretty good.

First, let’s consider capital return. Delta shares yield 1.8% in dividends at current prices — not really enough to warrant a spot on our 11 best dividend stocks list, but it is a decent payout.

Second, Delta bought back $200 million worth of stock last quarter. This is down from the $775 million it bought back in the same period a year ago (although $350 million was accelerated for anti-dilution due to pension obligations). But the point is the same: DAL is in there buying back its stock.

When a stock trades at less than 8 times earnings, buybacks are meaningful.

It also helps that Warren Buffett is in there. Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.B) currently owns about 8% of DAL stock. A bear might argue that Buffett is almost finished buying, since he’s unlikely to acquire more than 10% of Delta. That’s probably true. But between Buffett and Delta’s buying — and almost more importantly, not selling — there is a significant chunk of stock that won’t hit the open market for quite some time.

It also helps that DAL stock hasn’t had a PR fiasco quite like United Continental Holdings Inc (NYSE:UAL).

What to Do With DAL Stock

The valuation and Delta’s price action play a big role here. DAL has been struggling, off 8% on the year. But its ultra-low valuation makes it awfully enticing.

For investors considering getting long, it’s nice to know they’re placing their chips alongside Warren Buffett too. A cheap and profitable stock that is trading off its highs and has Buffett’s seal of approval … that’ a winning recipe.

Throw in the fact that Delta expects the current June quarter to go well, and presumably the rest of the year, and it wouldn’t be surprising for DAL stock to make new highs in 2017. Conservative investors can buy the stock at current prices and use the 200-day moving average as their stop-loss. Currently around $43.60, the 200-day MA is about 4%-6% below current prices, depending on where DAL opens for trading.

One last note: Delta Air Lines’ conference call is scheduled for 10 a.m. Thursday. Conference calls can always change the dynamics of an earnings result.

Bret Kenwell is the manager and author of Future Blue Chips. He can be contacted on Twitter via @BretKenwell. As of this writing, Bret Kenwell held no positions in any security mentioned.